Over the past year or so, those of us in Real Estate have become more and more accustomed to using certain acronyms that describe the current state of affairs in our business. Sadly, 60% of our current inventory of listed homes are considered distressed sales.
Since I just spent two days in class last week to become a specialist in the field of REO's, I thought I would tell you about this all-too-familiar term. REO stands for "Real Estate Owned". These are properties that have gone through the foreclosure process without a successful sale and have gone back to the bank or lender. Typically, the owner has already left the home, because he or she could not afford to pay the monthly mortgage. Now, the bank has the burden to market and sell the property for the highest possible amount. We in Georgia are one of the top 10 states in foreclosure activity.
One of the first things a bank does when taking possession of a foreclosed property is to order what's called a BPO or Broker Price Opinion. The lender may be in California and the property is here in Georgia. The BPO is what gives the lender "the truth, the whole truth, and nothing but the truth" about their reacquired asset. A licensed local realtor is hired by the bank to inspect the property, research comparable sales and write up a report including pictures. The realtor is the "local eyes and ears" of the bank. He or she recommends needed repairs, estimates how much those repairs will cost, and tells the bank what is going on in the local real estate market.
Sometimes, this same local Realtor is hired by the bank to manage the property and list it for sale locally. The Realtor is then responsible for getting repairs done while protecting the bank's asset until it sells. The management team might then include a home inspector, a contractor, an attorney, and a landscaper. Sounds like a lot of work, doesn't it?
And you thought Realtors just drove people around to look at houses! Realtors are in a critically important spot right now to help get bank-owned properties sold and back in the hands of individual homeowners. The faster we can do that, the better off we all will be. Our neighborhoods will look better and our cities and counties will be stronger financially.
Enough for today! I will continue with more foreclosure information in my next post.
If you have questions about short sale, foreclosure, or any other confusing real estate situation, please feel free to comment or call or e-mail me.
Linda
770-286-1560
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